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Elasticity of demand for high class

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A firm uses third-degree price discrimination to sell the same cologne under two different labels. The price elasticity of demand for `High Class' is -1.25. The price elasticity of demand for `Splash-This-Stuff-On' is -2. Which one of the following statements is true?

  • The price of `High Class' will be 2/5 times the price of `Splash-This-Stuff-On.
  • The price of `High Class' will be 5/2 times the price of `Splash-This-Stuff-On
  • The price of `High Class' will be 1/7 times the price of `Splash-This-Stuff-On.
  • The price of `High Class' will be 8/5 times the price of `Splash-This-Stuff-On.'

Reference no: EM131106040

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